Comments on: Should I Cash Out My 401K to Pay Off My Credit Card Debt? – Angie http://getoutofdebt.org/15351/should-i-cash-out-my-401k-to-pay-off-my-credit-card-debt-angie Free debt help and debt advice on how to get out of debt, getting out of debt consolidation scams, and inside information on the debt relief and debt help industry. Fri, 25 May 2012 02:12:00 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Kevin M. http://getoutofdebt.org/15351/should-i-cash-out-my-401k-to-pay-off-my-credit-card-debt-angie#comment-19345 Kevin M. Fri, 05 Feb 2010 20:50:33 +0000 http://getoutofdebt.org/?p=15351#comment-19345 As far as cashing out 401K to pay off high-interest credit card debt that is killing your monthly household budget........what if your 401K account has actually LOST considerable amounts of money over the past couple bad-economy years?!!? All this advice talks about how much a 401K account will grow to be when you retire at say 65 yrs old......but what if we keep having severe market drops over the next 20 years that keep knocking the account back to square-one, and also what if you only live to be say 63 or something anyways??!!?? At one point a couple years ago I had a 401K with about $80k in it, and now that same account has only $45k! So it lost nearly $35k that had been in there, PLUS it lost all of the money that I had continually been contributing to it (10% of paycheck) over the past 2 years and my employers 50% matching as well. So it really lost more like $75k...!!! So you're killing yourself now to make ends meet for a future that may never come and that you cannot "count" on for sure anyways. Taking all that into account, is it still an "absolutely horrible" idea to try to have a much happier debt-free life right now, and start building a potential retirement account all over again?? As far as cashing out 401K to pay off high-interest credit card debt that is killing your monthly household budget……..what if your 401K account has actually LOST considerable amounts of money over the past couple bad-economy years?!!? All this advice talks about how much a 401K account will grow to be when you retire at say 65 yrs old……but what if we keep having severe market drops over the next 20 years that keep knocking the account back to square-one, and also what if you only live to be say 63 or something anyways??!!??

At one point a couple years ago I had a 401K with about $80k in it, and now that same account has only $45k! So it lost nearly $35k that had been in there, PLUS it lost all of the money that I had continually been contributing to it (10% of paycheck) over the past 2 years and my employers 50% matching as well. So it really lost more like $75k…!!!

So you’re killing yourself now to make ends meet for a future that may never come and that you cannot “count” on for sure anyways.

Taking all that into account, is it still an “absolutely horrible” idea to try to have a much happier debt-free life right now, and start building a potential retirement account all over again??

]]> By: Steve Rhode http://getoutofdebt.org/15351/should-i-cash-out-my-401k-to-pay-off-my-credit-card-debt-angie#comment-17066 Steve Rhode Tue, 08 Dec 2009 17:14:30 +0000 http://getoutofdebt.org/?p=15351#comment-17066 Jeff, Excellent point on the tax withholding issue. This especially comes to light at this time of the year when we both hear about people that say they are waiting for a big tax refund check to come and dig themselves out of the debt hole they are in. You are absolutely right, they could have really benefited from the extra cash each month. Steve Jeff,

Excellent point on the tax withholding issue. This especially comes to light at this time of the year when we both hear about people that say they are waiting for a big tax refund check to come and dig themselves out of the debt hole they are in. You are absolutely right, they could have really benefited from the extra cash each month.

Steve

]]> By: Jeff Jackson http://getoutofdebt.org/15351/should-i-cash-out-my-401k-to-pay-off-my-credit-card-debt-angie#comment-17063 Jeff Jackson Tue, 08 Dec 2009 17:08:53 +0000 http://getoutofdebt.org/?p=15351#comment-17063 Angie, Listen to Steve!!!! A Chapter 13 bankruptcy is available. Depending on the size of your household, a Chapter 7 may be available also if you are current on your mortgages. Do not touch your 401K. Speak to a local bankruptcy attorney to learn more about how it can work for you. Please also review your income tax situation. If you are planning to get a tax refund of $1000 or more you are overwithholding. If you plan on getting a $3600 refund, you missed the opportunity to have an extra $300 per month in your pocket to help with your everyday living expenses. Asking Steve for advice is a great start. Best of Luck Angie,

Listen to Steve!!!! A Chapter 13 bankruptcy is available. Depending on the size of your household, a Chapter 7 may be available also if you are current on your mortgages.

Do not touch your 401K.

Speak to a local bankruptcy attorney to learn more about how it can work for you.

Please also review your income tax situation. If you are planning to get a tax refund of $1000 or more you are overwithholding. If you plan on getting a $3600 refund, you missed the opportunity to have an extra $300 per month in your pocket to help with your everyday living expenses.

Asking Steve for advice is a great start.

Best of Luck

]]> By: Steve Rhode http://getoutofdebt.org/15351/should-i-cash-out-my-401k-to-pay-off-my-credit-card-debt-angie#comment-17049 Steve Rhode Tue, 08 Dec 2009 02:09:25 +0000 http://getoutofdebt.org/?p=15351#comment-17049 Angie, Yes, you need to talk to the attorney about a Chapter 13 bankruptcy. You might make a decent paycheck but the primary factor is if you have enough money to repay your debts on a monthly basis. Steve Angie,

Yes, you need to talk to the attorney about a Chapter 13 bankruptcy. You might make a decent paycheck but the primary factor is if you have enough money to repay your debts on a monthly basis.

Steve

]]> By: Angie http://getoutofdebt.org/15351/should-i-cash-out-my-401k-to-pay-off-my-credit-card-debt-angie#comment-17047 Angie Tue, 08 Dec 2009 01:53:46 +0000 http://getoutofdebt.org/?p=15351#comment-17047 In my case We make a decent paycheck, is bankruptcy even a choice? In my case We make a decent paycheck, is bankruptcy even a choice?

]]> By: Steve Rhode http://getoutofdebt.org/15351/should-i-cash-out-my-401k-to-pay-off-my-credit-card-debt-angie#comment-17037 Steve Rhode Mon, 07 Dec 2009 19:44:26 +0000 http://getoutofdebt.org/?p=15351#comment-17037 Angie, I think you should read "<a href="http://getoutofdebt.org/7233/the-truth-about-the-failure-rates-and-completion-rates-of-credit-counseling-debt-settlement-and-bankruptcy" rel="nofollow">The Truth About The Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy</a>." So glad I caught you in time. Big hug. Angie,

I think you should read “The Truth About The Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy.”

So glad I caught you in time.

Big hug.

]]> By: Angie http://getoutofdebt.org/15351/should-i-cash-out-my-401k-to-pay-off-my-credit-card-debt-angie#comment-17035 Angie Mon, 07 Dec 2009 19:08:28 +0000 http://getoutofdebt.org/?p=15351#comment-17035 Thanks for your response. Through reading comments on your site we have realized that cashing out the 401k is the last thing to do. We have stopped our 401k contributions ($700 a month) for the time being (to improve cash flow) and considering a Debt Management Program with a non- profit organization. What are your feeling about DMP? Thanks again! Thanks for your response. Through reading comments on your site we have realized that cashing out the 401k is the last thing to do. We have stopped our 401k contributions ($700 a month) for the time being (to improve cash flow) and considering a Debt Management Program with a non- profit organization. What are your feeling about DMP? Thanks again!

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